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MBSB slowly recovers from 2020 slump, may inject fresh capital

KUALA LUMPUR: Malaysia Building Society Bhd (MBSB) has made gradual recovery in navigating the business under a highly uncertain economic environment, said its president and chief executive officer Datuk Seri Ahmad Zaini Othman.

MBSB, said Ahmad Zaini, could inject capital over the next three years to strengthen its capital position, while growing its fee-based income, such as wealth management and lower gross impaired financing ratio.

MBSB’s net profit shrank 61.4 per cent to RM269.32 million in the year ended December 31, 2020 (FY20), from RM716.90 million net profit in 2019.

In an exchange filing yesterday, MBSB attributed it to higher impairment losses and modification loss as a result of financing moratorium to customers.

Its FY20 revenue increased 4.7 per cent to RM3.15 billion from RM3.01 billion due to lower cost to income ratio as some expenditure were scaled down including commission charges.

For the fourth quarter, MBSB’s net profit fell 72.8 per cent to RM96.84 million from RM356.69 million, while revenue slipped 4.1 per cent to RM752.17 million from RM784.14 million previously.

“While we had been hit by substantial modification loss of RM504.75 million in FY20 due to blanket automatic moratorium granted by the government, the modification loss has been more manageable now due to implementation of a more targeted assistance to those in need,” he said in a separate statement yesterday.

Ahmad Zaini said MBSB would continue to assist its customers based on their financial situations.

“Our trade finance portfolio remains strong, contributing RM1.10 billion during the quarter. Our e-Prime Term Deposit-i campaign which was launched in November 2020 received an overwhelming response that the target was achieved within 2 months from the launch date,” he said.

The group’s total assets fell 4.48 per cent or by RM2.27 billion in FY20 from RM50.71 billion in FY19 mainly due to lower interbank placements.

The group’s deposit declined slightly to RM33.88 billion from RM35.89 billion in FY19, while its gross impaired financing ratio stood at 5.30 per cent from 5.19 per cent in FY19.

Group net impaired financing ratio stood at 2.81 per cent in FY20 compared to 2.34 per cent in FY19.

Its net profit margin improved 3.28 per cent in FY20 compared to 2.89 per cent in FY19 due to lower funding costs.

The group said it would continue to focus on selected sustainable sectors and drive greater growth and adoption of emerging technologies.

“Various new measures and extended moratorium following the prolonged Covid-19 pandemic is expected to impact profitability for the year. Constant monitoring of customer collections and risks are imperative to ensure sustained profits,” it added.

Source: NST